A Palestinian motorist rammed his vehicle into a group of people standing near a Jerusalem tram stop yesterday, injuring at least five, including four security officials, Israeli police said.

The incident, which police said they were treating as a terrorist attack, took place on a main road in East Jerusalem, the predominantly Arab side of the city, close to an Israeli border police station.

After crashing his vehicle, the driver got out and attempted to stab a passer-by with a knife before he was shot and wounded by police from the nearby station, police said soon after the incident.

“The incident was apparently a deliberate attack,” police spokeswoman Luba Samri said, adding that the driver had been taken to hospital in a serious condition.

The incident took place on the Jewish holiday of Purim, when the streets are busy with pedestrians. Last October and November, there was a spate of similar attacks, with Palestinian drivers ramming their vehicles into people waiting at the city’s light-rail stops. Those attacks killed three people and wounded around a dozen.

Tensions flared in Jerusalem last year, both before and after the Gaza war, but the city has been relatively calm in recent months.

On Thursday, the Palestine Liberation Organisation agreed to suspend security coordination with Israel in the occupied West Bank, which officials are concerned could have a knock-on impact on security throughout the territory.

Meanwhile, Israel will start buying some fruit and vegetables from the Gaza Strip next week, a partial resumption of imports halted when the Islamist group Hamas took over the Palestinian territory in 2007, Israeli officials said late on Thursday. They said the measure was designed to help a Gaza economy devastated by last year's war with Israel, and to make up for a shortfall in produce from Israeli farmlands left fallow during the current Jewish lunar calendar year in accordance with biblical law.

The move was welcomed by Jamal Abu al-Naja, director of the Gaza Vegetable Production and Export Association, who hopes it will make up farmers’ losses and eventually encourage working farms to seek bank funding to expand their production.

The Palestinians seek a state in the West Bank and East Jerusalem – which have been occupied by Israel since the 1967 Middle East war – and in Gaza, a strip of land on the Mediterranean coast that is separated from the West Bank.